Phase Two U.S.-China Trade Agreement Unlikely At Present
A phase two trade deal between the U.S. and China appears questionable now, with relations between the two countries deteriorating during the COVID-19 pandemic. Speaking to reporters on Air Force One on Friday, President Trump said, “I don’t think about it now,” and that he has “many other things in mind.”
In January, the U.S. and China signed a phase one trade deal in January. In that agreement, China committed to increasing purchases on an array of U.S. agricultural products, including soybeans, pork and cotton; as well as energy exports, financial services and manufactured goods such as aircraft, automobiles and auto parts, and medical devices. In turn, the U.S. cancelled planned tariffs on cellphones, laptops, toys and certain other Chinese-made products, while the 15-percent tariffs on $120 billion in Chinese imports ranging from flat-screen televisions to shoes, has been cut in half to 7.5 percent.
The phase one agreement left tariffs on $250 billion in Chinese imports, primarily industry products and materials used by U.S. manufacturers, at 25 percent. In January, Treasury Secretary Steven Mnuchin said that further tariff reductions could come as part of the phase two deal.
Americans for Free Trade, a coalition representing 470 businesses and trade associations, including PPAI, and every part of the U.S. economy, issued a statement in response to the president’s comments suggesting that a phase two trade deal with China is no longer likely. “Without a phase two trade deal that completely lifts all tariffs, American businesses, manufacturers, farmers and consumers who are already struggling as a result of the economic crisis will continue to pay the price for these taxes. Americans have already paid over $57 billion in tariffs since the trade war began last year. While the phase one deal was a good initial step, it did not do nearly enough to end the economic pain caused by the president’s trade war. Americans for Free Trade strongly encourages President Trump to negotiate and sign a phase two trade deal as soon as possible to end the tariffs and provide Americans with much-needed economic relief.”